Dot Org or Not Dot Org
CLS12 Session Name: ".org or not .org: Moderator: @luispo Note taker: @downey Sunday, 15 July 2012 - 11:00 AM Attendees: (Add your name here) * Michael Downey * Louis Suárez-Potts * Disclaimer: This session and its notes should not be construed as legal advice. Get lawyers and accountants when you need them. Notes: *What are the options in forming a ".org"? *Two models: **Corporate launch of a community **Organic community growth *When forming a foundation, questions exist: **What kind of foundation? **What kind of non-profit? **How, if, and when to use a for-profit organization? Along with a non-profit? ** What are your strategic aims? Evaluate all the types available. *The types of non-profit organization vary greatly worldwide. In the US: **Not-for-profit organization registered at state level only (but no US federal status) **US federal status:, 501©(3) is a general class of types of non-profit organizations. Many sub-types exist. **501©(6) exists more for the benefit of a group (business league) than a specific project. **In terms of running a software project itself, there may not be much difference in practical terms. **509(a)(3) is similar to a 501©(6) but exists to support other registered non-profit organiations' missions. *Resources: **"Free as in Freedom" http://faif.us/ **Nolo Press book on how to start a foundation: http://www.nolo.com/legal-encyclopedia/nonprofits *"Umbrella" and other sponsorship organizations **Fiscal sponsors and conservancies like http://sfconservancy.org/, SPI, ASF, and others make it easier for some projects to get some of the benefits of non-profit status without having to form an independent organization. Many out there. **Opinions differ on whether or not this is a good idea. Consider cultural fit with your project, needs vs. services available, etc. The overseeing organization needs to watch things very closely as everything goes on their tax records. **Don't forget non-software organizations like charities, universities, etc. **Linux Fund has been an umbrella org in the past. *Benefits: **Tax deductions: Many people don't really get a benefit about open source project donations (they don't have enough deductions to make a difference). **Businesses often treat donations as advertising, etc., so they don't worry much either. **Often times, grants and non-profit organizations will look for 501©(3)'s so it may matter if funds are needed there. **Consider both immediate-term benefits and long-term benefits. May be differences over time. *Examples: **Recent reports of delays in IRS granting 501©(3) status for software projects **Some past organizations were able to get 501©(3) for specific software projects. These days, IRS seems to think software development isn't generally a charitable activity. **Open Stack Foundation went with a 501©(6) because it was a consortium of large companies working together on the project. **Drupal started out by first going to an umbrella org for donations. **Debian outsourced its "business" leadership to another organization (SPI). The brand and development happens in the volunteer community. Bank accounts in US and Germany. SPI owns & defentds the trademarks. *Tips: **Just have vendors buy things directly and bypass expenses directly. **Any time you get donations of any kind, keep a record of it. **Treat it like a business. Mission, strategy, record-keeping, etc. **In the US, respect the IRS. They are strict and can punish. Their word is "law". **Consider other countries than US if they meet your needs better. Recommendations for Iceland as friendly to open source organizations **Distribution over centralization. Don't build a big global organization and leave work to local groups when possible. **For really small projects, the overhead of an independent non-profit may be too high to make practical sense. **Consider whether or not to give legal responsibilties to a project volunteer rather than an employee or officer. **Be flexible. Foundations are serving a purpose, and are not THE purpose. If purpose is just managing funds & events, remember there are other possibilities. **Don't forget US state regulation in addition to the US federal organizations. **Governmental tax organizations don't care about commits & code. They only care about money. *Summary: **Questions to consider **Do you want/need a foundation? **Should you hook up with an existing sponsorship organization? **What locality should you use for a legal entity? Some countries have more freedom than others. Financial presence in multiple locations allow for flexibility and freedom. **How does your project's brand interact with the legal organization?